Veolia-Suez: The Dramatic Battle to Supply Water to the People of Ile-de-France
STORY - A public administration's IT blunder has stirred confusion in a significant tender process.
A lucrative contract worth 4.3 billion euros, bitter rivals of French capitalism, an unfortunate IT hiccup, and the public administration's embarrassment... The ongoing battle between Veolia and Suez concerning the production and distribution of drinking water for 4 million residents of Ile-de-France now resembles a convoluted plot.
Initiated two years ago, the tender process to secure this twelve-year contract was abruptly halted last spring by Sedif (Syndicat des eaux d’Île-de-France). The public institution discovered that elements of Suez's bid had mistakenly been disclosed to its rival via a document exchange platform that was supposed to be highly secure, as reported by Marianne. "Please download the documents," read a message dated April 4th to Veolia, the historic operator of this market for over a century, confusingly merging its documents with those of challenger Suez.
A few days after becoming aware of the mistake, Sedif commissioned a judicial expert to ascertain how Veolia had acted once the glitch occurred. According to a 50-page report released in June, as revealed by Les Échos, the expert concluded that "given the above information, the confidentiality of the Suez files downloaded by the Veolia user appears to be compromised." The expert questioned Veolia's response time (the company informed Sedif of the malfunction on April 10) and specifically pointed out "activities dating from April 5 associated with copy-paste and print functions." Veolia's own IT expert, working alongside Sedif's, disputed these findings, a source close to the case mentioned. Veolia's teams expressed frustration to some Paris stakeholders about being "burdened with proving their innocence."
On Friday, October 13, Sedif's board met behind closed doors under its president, André Santini - the mayor of Issy-les-Moulineaux, to attempt to resolve the issue and decide the future course of the procedure, as per information from Le Figaro. Details are expected to be provided to both parties in the coming days, with some officials now concerned about "potential legal actions," a source familiar with the discussions explained.
Legal Quagmire:
Two sides of the story are now being contested behind the scenes. Suez claims that a third round was to be held at the end of 2023 since they had just received new questionnaires from Sedif, and both parties were to consider the findings (released during the summer) of the national commission on water debate. Veolia, on the other hand, believes the tender process was nearing its end. It's now up to Sedif to decide if the information they had before the IT mishap is enough to declare a winner. In that case, they might rely on the 2017 "Transdev" decision by the Council of State: Transdev had mistakenly received a USB key with information about its then-competitor, Keolis, during the Lille metropolis tender process. Other scenarios are also being considered. Sedif might opt to apply a provision from the public procurement code, leading to Veolia's outright exclusion. "The granting authority may exclude from the procedure (...) those who have sought to obtain confidential information that could give them an undue advantage," the provision reads.
A legal puzzle, paced by the claims of both parties, could then unfold. The stakes could even go beyond administrative litigation if, for instance, Suez chose to sue Sedif for "favoritism." When contacted, Suez declined to comment but emphasized that "Suez Eau France, if necessary, will of course not give up any legal means to ensure its interests are respected." The stakes are significant for the company: if they end up winning, they would become the number one in the French water market.
This battle to supply drinking water to half the inhabitants of the country's most populous region is set against a backdrop of tension between the two entities. After one year and five months of fierce confrontations and several hundred million euros in costs, it was in January 2022 that the global leader in environmental services, Veolia (now led by Estelle Brachlianoff), officially became the owner of its main competitor, leading to the birth of the "new Suez." This entity was formed from assets not acquired by Veolia during its takeover bid and is now led by Sabrina Soussan.
"The tender process continues in strict adherence to the initial schedule, with the contract set to start on January 1, 2025," stated the communication director of Sedif, who did not wish to answer our questions.